So Much News
What about tariffs, inflation, a recession? What is the Fed going to do with interest rates? Bombs are dropping in Iran…is it another war? Will the Big, Beautiful Bill get through Congress?What about the deficits? The Supreme Court has another ruling!
“Life moves pretty fast. If you don’t stop and look around once in a while, you could miss it.” This is probably the most famous quote from Ferris Bueller’s Day Off, released in 1986. That iconic quote has never been truer than today. In the investment world, filtering out the noise and focusing on what matters is what we have to do.
Currently, what matters is watching the Federal Reserve to see if or when they are going to lower rates. Rate cuts could give a big boost to the US economy. For example, one sector of the economy that is currently stalled and could get a big boost from a rate cut is the housing industry. Housing, whether its new builds or existing home sales, has far reaching effects into other industries across the country and helps drive economic growth.
Rate Cuts
This year, inflation has come down close to the Fed’s goal of 2% and the probabilities of a rate cut are continuing to increase. While many are hoping for that cut to come at the end of July at the next Fed meeting, US Treasury Secretary Scott Bessent said on Tuesday he believes the Federal Reserve could lower interest rates by September at the latest.
1-Month US Treasury Yield
A good indicator of what Wall Street expects is the yield of the 1-month US Treasury. The fall of 2024 was the last time rates were cut, and the chart below of the 1-month Treasury yield shows that yields began falling before each of the three cuts.
This market anticipation is illustrated by the vertical, red dotted lines which are approximately when the Fed announced the rate cuts. The downward sloping red arrows show that there was a buying surge in these short-term treasuries before each cut. At the far right in the green circle, we can see that yields have been falling throughout June 2025 in anticipation of a rate cut as they did in the fall of 2024, but this past week markets put a hold on the buying as the rate rose on higher selling. Job data that came out today was stronger than expected and could put a crimp in the markets hope of lower rates.
June payroll data is being released on Thursday this week, which should give more clarity to the job picture.
Regardless of when the cuts happen, charts like this can give a good heads up of what the market is expecting in the near future. Combining charts like this along with other technical data helps cut through all the noise and give a clearer gauge of the temperature of the markets. This enables better decision making.
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This post is for informational purposes only. It is not intended as investment advice as each person’s financial situation is different. I strongly recommend working with a financial advisor who can deliver current information to you quickly and offer help with sorting through the various investing options. Bret Wilson is a Financial Advisor with Wilson Investment Services, based in Rockwall, Texas.